$41.00 donated in past month
From the Open-Publishing Calendar
From the Open-Publishing Newswire
Indybay FeatureRelated Categories: California | East Bay | San Francisco | U.S. | Global Justice and Anti-Capitalism | Government & Elections | Health, Housing, and Public Services | Labor & Workers
Stop Union Busting And Privatization At Staples By UPSO All Out On April 24 UPWA Statement
There will be national protests against the privatization of the post office focused on Staples which is being used to outsource public postal worker jobs. This is the statement of the United Public Workers For Action supporting these protests.
Stop Union Busting And Privatization At Staples By UPSO All Out On April 24 National Statement Of UPWA
The national protest on April, 24, 2014 called by the American Postal Workers Union APWU and other postal unions is an important step in fighting the privatization and destruction and looting of our US post office.
The privatization is being implemented to benefit capitalists like Mitt Romney who owns Staples and is part and parcel of the destruction of public services from the privatization of the schools through charters and corporate testing to the privatization and outsourcing of public transit by Veolia and other companies.
We need to unite the 11 million public workers in the United States to launch a real political education campaign against the privatization of Staples and all other profiteers and union busters. This is not only a US issue but a global struggle and in Canada they have already ended postal delivery to homes harming the seniors and tens of millions of working people.
We need regular national mobilizations that unites public workers to and the broader working class to initiate a nationwide strike movement and worksite occupations against privatization to stop the theft. Defense of our standards of living is a human and workers right. It is essential for all of labor to fight, in united action, against the austerity drive to privatize the Post Office, Public Transit, Public Utilities and schools.
It is not only the Republicans that are pushing these attacks by Democratic politicians in every state, the corporate controlled Congress and the Obama administration which wants to end 6 day service.
At the same time we fight all privatizations, workers need a labor movement that runs independent labor working class candidates who will defend our public services and organize workers tribunals for the criminal prosecution of these crooks like Senator Diane Feinsteins' husband Richard Blum who owns CBRE Group Inc. which got a crooked bid contract to sell off the post office to his pals for billions.
The growing corruption crisis in the US is a direct result of the privatization drive by these corporate criminals and their political friends in Congress who benefit from stealing our public resources.This direct relationship between the privatizers, the Democratic Party agents and our unions must be smashed by the self-activity of the rank and file also end if we are to seriously so as to stop the privatizations.
The United Public Workers For Action http://www.upwa.info is an national network of public workers and worker activists who are fighting to defend public services and public workers.
We will be having a national conference on October 10 & 11. Contact us for more information.
Are Some People Too Big To Name? Richard Blum And The Corporate Media Cover-up Of The "Progressive Destruction of the U.S. Postal Service"
by Gray Brechin
The progressive destruction of the U.S Postal Service and the liquidation of the public’s property for the benefit of a few resembles a daylight bank heist with no cop on the beat. That cop was once meant to be the U.S press, but reporter Alison Fu’s April 23 story “Postal Service Approves Relocation of Downtown Branch” provides yet another dispiriting example of both the slothfulness of that press as well as its complicity in the crime.
Ms Fu’s article reads largely like a rip-and-print from an official USPS press release. She made no effort to go beneath its spokesman’s justifications for why current management has set the postal service on death cycle. Nowhere does the story mention that the USPS’s $25 billion deficit is mostly the result of a poison pill called the Postal Accountability and Enhancement Act fed to it by Congress and signed by George W. Bush in 2006. The PAEA requires the USPS to pre-fund its pensions for 75 years into the future within just 10 years while barring it from providing “nonpostal services” that would enable it to compete with the private sector. It was passed by voice vote at the behest of generous private carriers and right-wing think tanks ideologically opposed to public service and seeking to profit as the USPS strips its own public assets.
Allison Fu uncritically quotes USPS spokesman Augustine Ruiz as saying that “It makes good business sense” to sell property that it owns to then lease space that it doesn’t. You don’t have to get an MBA from Haas to know that is not a good business model —unless you are a real estate broker that is representing both the seller and buyer while also advising the USPS on which of the public’s properties it should sell.
In fact, the sale of a portfolio of properties acquired and paid for by U.S. taxpayers for over a century and now estimated to be worth between $50-100 billion appears to be largely driven by the giant real estate firm CBRE, a company chaired and largely owned by private equity billionaire and U.C. Regent Richard C Blum. That a company controlled by the spouse of Senator Dianne Feinstein received an exclusive contract on exceedingly favorable terms, and that the sale of valuable and historically significant public property is further enriching both of them would, not long ago, have piqued the curiosity of gumshoe journalists. That it provokes scarcely a yawn today is yet further evidence of the depth to which an ever more lazy and lapdog press has sunk in the new Gilded Age of the 21st century.
Corrupt Blum-Feinstein Privatization Scheme To Profit In Sell Off Of US Post Offices
Inspector general criticizes USPS relationship with real estate representative CBRE
By Lisa Rein, Published: February 20 E-mail the writer
The U.S. Postal Service is putting itself at financial risk by allowing an outside real estate firm to negotiate sales and leases of postal property on behalf of the mail agency and prospective buyers and renters at the same time, a watchdog warned this week.
The practice, called “dual agency representation,” has the potential to create conflicts of interest for CBRE, with the result that the real estate company might not maximize revenue for the financially ailing Postal Service.
“CBRE conflicts of interest could lead to financial loss to the Postal Service and decrease public trust in the Postal Service’s brand,” USPS Inspector General David C. Williams said Wednesday in a “management alert” that strongly recommends that the arrangement be scrapped.
The Postal Service and the firm have been targeted by critics for the selling off of historic post office buildings, at what preservationists say have been relatively low prices and without adequate public notice or effort to adhere to federal preservation guidelines.
The chairman of CBRE’s board of directors is Richard C. Blum, who is married to Sen. Dianne Feinstein (D-Calif.), a fact that has heightened scrutiny of the relationship between the Postal Service and the real estate firm. Wednesday’s report did not address the historic buildings or Blum.
In the report, the inspector general urged postal officials to switch to arm’s length transactions, in which CBRE would represent only the agency. The change, the report said, would ensure that contract terms do not give too much financial control to buyers or to sellers.
“We do not believe allowing the arrangement is in the Postal Service’s best interest,” Michael A. Magalski, deputy assistant inspector general for support operations, wrote to postal officials.
“When representing the Postal Service, it is important for CBRE to be focused on maximizing revenue when negotiating sales and leases of Postal Service properties and reducing costs when negotiating leases of properties for the Postal Service to occupy,” Magalski wrote. “This focus is compromised when it is also representing the interests of the buyer, lessee, or lessor.”
Postal officials told Magalski that they do not plan to stop the practice of dual representation, arguing that it gives them wider exposure to potential buyers or renters and ensures healthy competition. Such arrangements also are allowed under CBRE’s contract with the General Services Administration, postal officials said.
“The Postal Service appreciates the time and effort that the [Office of Inspector General] invested in preparing the Management Alert, however, it does not agree with the OIG in this instance,” Sue Brennan, a Postal Service spokeswoman, said in a statement. Postal officials believe that “following their recommendation is not in the best interests of the Postal Service.”
She said the agency “has put in place reporting and consent requirements to minimize any risks associated with conflict of interest.”
But the inspector general said “no consensus exists as to the benefits associated with a dual agency arrangement.”
In a statement, CBRE said the company “undertakes to maximize the value of each asset disposition” for the Postal Service, whose properties have “consistently” been sold at or above the appraised value provided by a third party.
“All properties are sold on an arm’s length basis after broad exposure to the market,” the company said.
Wednesday’s report is the latest in a string of controversies involving the Postal Service’s contract with CBRE, a $7 billion Fortune 500 company the agency made its exclusive real estate agent in 2011. The Postal Service leases about 24,000 post offices and other properties and owns about 9,000 more.
The company said that Blum, as its “non-executive” chairman, plays no role in day-to-day operations and was unaware of the contract with the Postal Service when it was awarded. His investment firm owns 41 / 2 percent of CBRE’s outstanding shares.
Feinstein’s office has said the senator does not discuss her husband’s business decisions with him — and that Congress has no role in choosing which companies do business with the Postal Service.
Williams is also conducting a detailed audit of postal real estate transactions handled by CBRE, “given the multiple roles CBRE plays for the Postal Service and within the real estate industry,” the report said.
Opponents of the sales of historic post office buildings got nonbinding language in the recent federal budget that supports blocking further sales until the Office of Inspector General completes its probe of the agency’s process for transferring ownership of its buildings.
The contract with CBRE requires the firm to notify postal officials of any actual or potential conflicts of interest within five days of a request for or ordering of contract work.
The company has submitted 10 “dual agency” disclosure letters detailing transactions in which it represented both the Postal Service and potential buyers or renters, the inspector general said. It represented both parties in three of those transactions before the contract with the Postal Service was changed in June 2012 to allow for dual representation.
The husband of US Senator Dianne Feinstein has been selling post offices to his friends, cheap.
September 18, 2013NEWS » FEATURE
The husband of US Senator Dianne Feinstein has been selling post offices to his friends, cheap.
By Peter Byrne
• PETER BYRNE
• Activists have protested the proposed sale of the historic downtown Berkeley post office.
Editor's Note: The following is an edited version of the introductory chapter of a new e-book, Going Postal, by investigative journalist Peter Byrne.
On July 27, two hundred people sang and chanted on the steps of the historic main post office in downtown Berkeley to protest its upcoming closure and sale. City Councilman Jesse Arreguin took the microphone to angrily decry the closure. In fact, the Berkeley City Council had voted unanimously to oppose the sale. Why the day of rage?
When a post office closes, it is obviously that much harder to buy a stamp, pick up a package, send a registered letter, or purchase a money order. But inconvenience alone did not account for the existential angst being expressed by the mostly over-fifty members of the throng as they questioned the motives of the United States Postal Service for selling post offices all over the country to developers. "Which of our public assets will be privatized next?" speakers asked. "Streets? Schools? The Lincoln Bedroom?"
The Berkeley crowd is not acting alone: From the beaches of Santa Monica to the avenues of the Bronx to the orange farms of Nalcrest, Florida, people who like the US Mail are getting mad. "Hey, wait a minute, Mr. Postman! That is ourcommunity post office — "
To which the federal flak-catchers reply: "The Internet is killing us. The Postal Service is broke. We have to sell. Get used to it."
But email is not the problem and the budget deficit is easy enough to fix, so there must be other reasons for the forced sales, say save-the-post-office activists. The post office is being killed for political reasons, they assert, pointing out that the corporation with the exclusive contract to negotiate sales for the Postal Service's $85 billion real estate portfolio is C.B. Richard Ellis (CBRE). And that the company is chaired by Richard C. Blum, who is the husband of US Senator Dianne Feinstein and a member of the University of California Board of Regents. CBRE's connection to a politically powerful family with a history of accessing public pension funds to make private investments has caused more than a few activists to suspect wrongdoing — even though no evidence of any conflicts of interest tied to the CBRE contract have been revealed.
My yearlong investigation has uncovered evidence of multiple conflicts of interest and problems with post office sales supervised by Blum's company, including:
• CBRE appears to have repeatedly violated its contractual duty to sell postal properties at or above fair market values.
• CBRE has sold valuable postal properties to developers at prices that appear to have been steeply discounted from fair market values, resulting in the loss of tens of millions of dollars in public revenue.
• In a series of apparently non-arm's-length transactions, CBRE negotiated the sale of postal properties all around the country to its own clients and business partners, including to one of its corporate owners, Goldman Sachs Group.
• CBRE has been paid commissions as high as 6 percent by the Postal Service for representing both the seller and the buyer in many of the negotiations, thereby raising serious questions as to whether CBRE was doing its best to obtain the highest price possible for the Postal Service.
• Senator Feinstein has lobbied the Postmaster General on behalf of a redevelopment project in which her husband's company was involved.
Because the Postal Service is running an artificially created budget deficit, tens of thousands of jobs are being liquidated as post offices and mail processing facilities in towns and cities across the country are short-listed to be sold for ready cash. CBRE has already sold 52 of these properties, and hundreds more are on the chopping block.
And 80 percent of the Postal Service's multibillion-dollar deficit is caused by a law passed by Congress in 2006 that requires it to prepay retiree health benefits 75 years into the future. This unprecedented, budget-killing command does not apply to any other government agency. If this burden were to be rescinded — and business mail were to be charged the cost of its delivery— the Postal Service would be in the black, according to Congressional reports.
The ugly truth of the matter, say informed critics such as New York University professor Steve Hutkins, is that the Postal Service is being privatized in the interests of scores of corporations that not only compete with it, but are also its largest contractors, including FedEx and United Parcel Service (package routing); Parsons Corporation (management services); Accenture (financial consulting); and Pitney Bowes (direct mail).
And then there is CBRE, the world's largest commercial real estate firm. In June 2013, Postal Service Inspector General David C. Williams published a scathing audit of CBRE's exclusive contract to manage all the sales and leasing of postal real estate. Williams noted that outsourcing these activities to a single firm is "a fundamental change from how the Postal Service previously managed its real estate portfolio [and] Facilities officials should improve oversight to mitigate inherent risks associated with the CBRE contract .... Specifically, there are conflict of interest concerns."
Williams warned of the potential for contract fraud, but he stopped short of referring the matter to a prosecutor, and advised the postal executives in charge of the CBRE contract to clean up their act.
Over the past year, my investigation has explored the kinds of conflicts of interest that concerned Williams by diving deep into the public record. CBRE's contract, its postal facility sales data, as well as expense reports for Postal Service executives were obtained under the Freedom of Information Act (FOIA). The deeds of sale and assessment data for most of the postal properties sold by CBRE were found at the county level.
The county records allow for comparing the assessed value of the postal properties before they were sold to the final sales prices negotiated by CBRE on behalf of the Postal Service: And the comparisons reveal that CBRE has sold the bulk of this public real estate at prices under their assessed values — and apparently at far below fair market values.
When these findings were shared with Chuck Zlatkin, Legislative and Political Director of the New York Metro Area Postal Union, he said, "Shocking as this information is, it is not surprising because we have seen a pattern of corruption at the Post Office ever since the manufacture of the health care benefit prepayment crisis. It is certainly not permissible for CBRE to sell property paid for by the public to its own business partners, or to anyone else, at a discount. In my opinion, CBRE's conflicts of interest contain an element of fraud."
CBRE Group Inc. was given a list of the key facts and analysis reported in this investigation. Through its spokesman Philip Russo, the company declined to comment.
Conflicts of Interest
In June 2011, the Postal Service hired CBRE as its exclusive agent to sell post offices, warehouses, parking lots, and vacant land worth hundreds of millions of dollars. The contract instructs CBRE to propose properties to sell with final approval reserved to the head of the Postal Service's Facilities Division, Tom Samra. And it requires CBRE to sell them at or above appraised (fair market) values, or not at all.
CBRE is also charged with appraising the fair market value of these properties and listing a reasonable sales price. It is important to point out that real estate appraisals are not customarily performed by the agent marketing the property. To avoid conflicts of interest, property appraisals are normally performed by professionals not involved in negotiating the sale.
Responding to a FOIA request through a staff attorney, Postmaster Patrick Donahoe categorically refused to disclose CBRE's appraisals. Attorney Jeff Meadows said that CBRE's appraisals do not need to be disclosed to the public because such information is "commercially sensitive" and it is comparable to a "national security" secret (even though the appraisals are not classified). The Postal Service eventually released the final sales price for each property sold by CBRE and CBRE's sales invoices, which recorded the amount of its commissions (2 to 6 percent). The appraisal figures, however, remain secret.
By way of explanation, an assessed value is normally based upon the most recent sales price of a parcel, which is likely to be less than its current fair market value. In many counties, the assessed value is calculated as a percentage of the fair market value. And during economic downturns, assessed values are often lowered to keep pace with a falling market.
During the first two years of its contract, CBRE sold the 52 properties it had picked to market for millions of dollars less than their assessed values. For example, in Seattle, CBRE sold a post office building in 2011 for $8 million that was assessed at $16 million. And earlier this year, it sold a seventeen-story office building in St. Paul, Minnesota for $20 million under the 2009 value assessed for it shortly before it was put on the market by CBRE.
Details presented in the chapter "Following the Money" of this e-book show that from June 2011 through May 2013, CBRE sold 52 postal properties for $166 million. The total assessed value of this portfolio at the time of sale was $232 million. Subtracting out the nine properties that sold at a value higher than their assessed value, CBRE has arguably undersold its postal real estate portfolio by at least $79 million. And it undersold these properties even as the price of commercial real estate, especially for central downtown parcels, was approaching the pre-crash highs of 2007.
Interviews about standard real estate practices with two experts provided by the National Association of Realtors indicate that the sale of a property at or below assessed values most often occurs when it is located in a distressed or impoverished area. When there is shortage of commercial real estate in developable areas — which has been the general situation, nationwide, for several years — demand tends to push prices far higher than assessed values.
But the vast majority of the CBRE-negotiated sales did not involve distressed properties: They were mostly located in economically healthy neighborhoods. The sales were mostly of central downtown buildings, with parking, in wealthy or revitalizing neighborhoods that attracted restaurant, boutique, and residential developers, or modern, suburban office buildings and warehouses, also with ample parking that attracted high-tech industrial firms.
In other words, the most saleable postal properties were the ones most likely to command prices that exceeded their assessed values.
Not at Arm's Length
Real estate transactions are normally negotiated by agents who stay at "arm's length" from each other's interests. That makes sense because sellers try to obtain the highest price possible, while buyers angle for the lowest price. Each agent is bound to get the best possible price for his or her client in a competitive marketplace.
But in a series of non-arm's-length transactions, CBRE has sold 20 percent of its postal portfolio to its own clients and/or business partners. In Boston, it sold a parcel at a large discount of its assessed value to a developer with whom it was partnered. And it sold another Boston parcel to one of its largest shareholders, Goldman Sachs Group. Real estate industry ethics require agents to get the best deal for their clients (in this case, the US Postal Service), not for their business partners and owners.
CBRE kept the entire seller/buyer commission of up to 6 percent in 34 of 52 transactions. In the majority of these deals, CBRE appears to have represented the interests of the buyer as well as those of the seller, even though CBRE was originally contracted to represent only the interests of the Postal Service.
Astonishingly, CBRE's contract was amended in 2012, at the request of CBRE, to allow it to negotiate on behalf of both the Postal Service and prospective buyers.
To be fair, CBRE need not shoulder all of the blame for the $79 million in lost revenue. In his June 2013 audit, the post office's inspector general reported that executives running the Postal Service Facilities Division were not properly monitoring the CBRE contract.
Williams found that:
• the dollar amount of the contract was improperly open-ended and posed a risk of runaway costs. The original $2 million budget had unaccountably tripled.
• Facilities Division officials improperly paid CBRE invoices without checking for fraud. At least 227 invoices worth $1.7 million were paid without proper oversight — "present[ing] an increased risk of fraud [and] pos[ing] an increased risk to the Postal Service's finances, brand, and reputation."
In short, the normal checks-and-balances mechanisms for preventing conflicts of interest and contract fraud have been missing in the monitoring of CBRE's performance by Facilities Division officials. Given the ethical norms at play on the top floors of the Postal Service's headquarters at L'Enfant Plaza in Washington, DC, this is not surprising. The inspector general has also reported that high-ranking Postal Service executives have charged home mortgages and European vacations to their government credit cards.
And Facilities Division expense reports reveal that staffers have purchased hundreds of thousands of dollars worth of expensive dinners, online gift cards, books, and even toys with their government-issued credit cards. The division's chief, Samra, has billed the deficit-ridden Postal Service for flying first class to Europe, even though he personally is worth as much as $98 million.
The Postal Service was given a list of the key facts and analysis reported in this investigation. Through his spokesman, David Partenheimer, Postmaster General Patrick Donahoe declined to comment.
The Boston Seaport Deals
CBRE is a major player in the development of a brand-new neighborhood in downtown Boston called the Seaport District. The mixed-use district is slated to revitalize 1,000 acres of abandoned railways and crumbling docks that surround the Boston Convention Center. The linchpin of the giant redevelopment project's design is the upscale Channel Center, which will sport expensive residences, office buildings, and grassy parks. A portion of the project is sited on Postal Service land that has been sold by CBRE to the developers.
In Boston, during 2012, while acting as the Postal Service's agent, CBRE sold real estate at less than its assessed value to a group of developers called Commonwealth Ventures LLC, with whom it was partnered in a redevelopment project. CBRE also sold a valuable parcel in the same development project to one of its largest stockholders, Goldman Sachs Group. These and a host of similar transactions around the country raise questions as to whether CBRE improperly benefited from selling postal properties to its clients and business partners.
According to the Channel Center developer, Commonwealth Ventures LLC, CBRE is a member of its development team, which provides real estate services to the project. Commonwealth Ventures is also partnered with AREA Property Partners, which has collaborated with CBRE on other real estate ventures. Another CBRE client, the real estate arm of General Electric Corporation, is also a member of Commonwealth Ventures' Channel Center team. In what appears to have been a conflict of interest, CBRE has acted as the broker for both the Postal Service and the Channel Center development partnership, which is composed of its clients.
In September 2012, AREA Property Partners paid the Postal Service $10.3 million for a parking lot on which the company planned to construct the Channel Center parking garage. The Postal Service was represented by CBRE in the sale, even though CBRE is also the agent for the Channel Center developers, Commonwealth Ventures, and AREA.
According to the Boston Assessor's property database, the parking lot was valued at $12.4 million in 1991. This key piece of real estate in the Channel Center project was sold by CBRE for 20 percent less than it had been valued more than two decades before. In addition, because CBRE is also a member of the development team, the sale raises questions as to whether the company stands to reap additional profits from the Channel Center project.
Remarkably, the invoice that CBRE submitted to the Postal Service's Facilities Division for the sale of the Channel Center parking lot to Commonwealth Ventures did not contain an address for the property sold, only the notation "0 Square Feet." Under "value," someone wrote, "?" Nowhere on the undated invoice does the purchase price appear. Nor does the invoice reference a contract number, nor any form of payment authorization. It demands a "flat fee" of $377,500 for negotiating the sale, even though the CBRE contract does not allow for flat fees. Nonetheless, the incomplete invoice was paid by Postal Service facilities executives.
The Goldman Sachs Connection
A real estate partnership created by the Goldman Sachs Group called W2005 BWH Realty LLC purchased a parcel of Postal Service land for a residential development alongside the Channel Center in September 2011. The parcel was subdivided from a larger parcel, so it had no previously assessed value as a unit. CBRE sold the postal parcel for $1 million to the entity controlled by the Goldman Sachs Group, which owns 6.6 percent of CBRE, a stake that rivals Blum Capital Partners' stake of 6.9 percent. Goldman Sachs is also a longstanding CBRE client and its co-investor in numerous ventures. Since CBRE took the entire commission of 6 percent, it appears to have represented both seller and buyer in a transaction that poses an apparent conflict of interest.
The CBRE invoice for the sale to the Goldman Sachs partnership does not list a dollar amount for the sale, nor the name of the buyer (which was obtained from deeds on file with the Boston Assessor's office).
In an email, James Allen of the Postal Service Facilities Division wrote that after paying CBRE for both of the Boston Seaport deals, facilities managers requested that CBRE change the format of its invoices to include more information.
Richard C. Blum did not respond to repeated requests for comment.
To read about Senator Feinstein's efforts in a California redevelopment project in which Blum's company was involved, see the chapter "DiFi and the Blumpire" of the e-book.
Proceeds from the sale of the e-book, Going Postal, which may bedownloaded in its entirety at Amazon, go solely to the author of this report.
The Democratic Party is directly pushing privatization of the post office, education, transit and public services.
Diane Feinstein and Richard Blum's mansion in Pacific Height and other mansions around the country was obtained by stealing public funds in bidding on Iraq contracts, privatization and looting of UC pension funds and selling off the US public post office for profits.